iGATE (Nasdaq:IGTE), the first Business Outcomes driven integrated
Technology and Operations (iTOPS) solutions provider, today
announced its financial results for the fourth quarter and year
ended December 31, 2010.
Fourth Quarter Highlights:
- Revenue of $81 million compared to $52.4 million in the
corresponding quarter in the previous year
- Q4 Net Income: $14.7 million GAAP; $19.9
million non-GAAP
- Achieved 42.7% gross margin and 19% operating margin
- Diluted earnings per share of $ 0.25 GAAP
(increase of 66.7% from the corresponding quarter last year); $0.34
non-GAAP (increase of 88.9% from the corresponding quarter last
year)
- 8,360 employees as of December 31, 2010; net addition of 82
employees during the quarter
- Three new customers added during the quarter
Full Year Highlights:
- Net revenue for the full fiscal year 2010 of $280.6 million, up
45.3% compared with the previous year.
- Achieved 40.2% gross margin and 18.9% operating margin
- GAAP net income of $51.8 million, up from
$28.6 million in the previous year, and GAAP
diluted EPS of $0.90, up from $0.51 in the previous year.
- Non-GAAP net income of $62.2 million, up from $34.4 million in
the previous year, and non-GAAP diluted EPS of $1.08, up from $0.61
in the previous year.
Phaneesh Murthy, CEO, iGATE said, "We rocked in 2010, thanks to
iTOPS Consulting and growth in existing accounts. I am especially
delighted with our strong earnings growth. However, we have to do
some heavy-lifting in 2011. We have to focus on our integration
with Patni and deliver value quickly."
Sujit Sircar, Chief Financial Officer said, "In spite of
absorbing over $3.2 million of post tax acquisition related
expenses, we had a very strong earnings and cash flow quarter. Our
continued endeavor to improve profitability and operations of the
company is reflected in our results for 2010, and we ended the year
with a high note in all our financial parameters."
Awards and Recognitions:
- Ranked third in Dataquest-IDC's annual survey of the top 20
best IT employers in India. iGATE among top three employers fourth
time in a row
- Ranked in the FINTECH 100 2010 for the third year in a row
- Won the practice of excellence award from ASTD (American
Society for Training and Development) for excellence in career
planning and development
- In the International Association of Outsourcing Professionals'
(IAOP) 2010 Global Outsourcing 100 List, iGATE is
- Ranked No. 35, a significant leap from No. 59 in 2009 - Named
best 20 Global Outsourcing Leaders in UK and for the second
successive year in Canada - Placed as one of the Top 20 global IT
companies serving the Discrete Manufacturing Industry - Named as a
leading IT vendor for the Insurance Industry
Acquisition:
On January 10, 2011, iGATE announced that its subsidiaries
executed definitive agreements to acquire a majority stake in Patni
Computer Systems Ltd. (NSE:PATNI) (NYSE:PTI), the Mumbai-based IT
services and BPO company. The transaction is valued at
approximately $1.22 billion, including the mandatory open offer to
the public shareholders of Patni. The transaction is expected to be
completed in the first half of 2011. iGATE expects the transaction
to be accretive by 2012 on a non-GAAP diluted earnings per share
basis. With revenues of the combined entity close to $1 billion,
this deal is expected to be a transformational one for iGATE.
New Appointments in Q4 2010:
iGATE announced the appointment of Mr. W. Roy Dunbar, a seasoned
international business leader with significant Information
Technology, Financial Services, and Healthcare experience, to its
Board of Directors. Roy Dunbar, 49, has been the Chairman of
private companies engaged in renewable energy and green
construction, prior to which he served as the CEO of Network
Solutions Inc. He has also served as President of Global Technology
and Operations of MasterCard Worldwide (formerly known as
MasterCard International Inc.) where he was responsible for its
global payments platform and operations. Previously, Mr. Dunbar
worked for Eli Lilly for 14 years where he last served as President
of Eli Lilly's Intercontinental Region, with responsibility for
operations in Africa, the Middle East, the Commonwealth of
Independent States, Asia, Latin America, and the Caribbean.
iGATE appointed Mr. Robert. W. Massie as the Chief Sales
Officer. Rob has more than 20 years of sales, consulting and
management experience in the IT industry. He joins iGATE after
leading IBM Software Group's Global Industry Sales organizations
for 9 years. In his last role, Robert served as Vice President of
IBM's Information Agenda team, where he was responsible for driving
sales of industry-specific solutions that help IBM customers
increase their strategic business results through the innovative
use of business analytics and information management software.
Prior to IBM, he spent eight years at Deloitte Consulting in
Washington, D.C. where he led the payments technology practice. He
has also directed the services and product development
organizations for a financial services integration software
provider, managed the credit card portfolio for a major trade
finance organization, and held several branch banking roles for
major U.S. retail banks.
Fourth Quarter and FY'10 Operating Results:
Results for the fourth quarter and FY'10 on a GAAP and non-GAAP
basis are provided in the table below.
| |
Q4 FY10 |
Q4 FY09 |
Y/Y |
FY10 |
FY09 |
Y/Y |
| Net revenue ($Millions) |
81.0 |
52.4 |
55% |
280.6 |
193.1 |
45% |
| Operating margin($Millions) |
15.4 |
10.5 |
46% |
53.0 |
32.4 |
64% |
| GAAP net income
($Millions) |
14.7 |
8.6 |
71% |
51.8 |
28.6 |
81% |
| GAAP diluted EPS ($) |
0.25 |
0.15 |
67% |
0.90 |
0.51 |
76% |
| Non-GAAP net income ($Millions) |
19.9 |
10.0 |
99% |
62.2 |
34.4 |
81% |
| Non-GAAP diluted EPS ($) |
0.34 |
0.18 |
89% |
1.08 |
0.61 |
77% |
Key Customer Wins During the Fourth
Quarter:
A large US based commercial bank has engaged with iGATE to
provide assistance with various technology projects and process
re-engineering initiatives. The initial engagements entail
assistance with a data warehouse project that collates the bank's
customer information for their international clients.
A US based home mortgage company has engaged iGATE to
re-evaluate their technology and operations landscape in order to
achieve their corporate objectives of streamlining operations,
reducing costs and enhancing customer experience. iGATE is to
provide recommendations for an alternative operating model and
assist in implementing the new roadmap.
A leading utility market leader is utilizing iGATE's portal,
mobile and agile expertise in developing web portal and mobile
applications to boost sales & marketing of its products by
providing real time global monitoring and support of its product
installations.
iGATE won a multi-year QA agreement encompassing test planning
execution and automation for a large multinational bank's retail
banking applications area.
iGATE won a multi-year development contract on development
support for traditional and transformational initiatives for a
leading provider of life, property and casualty and travel
insurance.
A leading consumer packaged goods company has engaged iGATE to
execute and deliver a series of strategic SAP projects as part of
their Core IT Roadmap Initiative. These projects will be delivered
through 2011 and 2012.
iGATE has entered into an engagement with a Fortune 10 client to
provide strategic consulting and advisory services in enterprise
risk management and assist them in Sarbanes-Oxley compliance and IT
controls and framework.
Conference Call and Webcast:
iGATE will host a telephonic conference call on Wednesday,
January 19, 2011 at 8:00 am Eastern time to discuss the results of
its fourth quarter and full year ended December 31, 2010. The live
discussion can be accessed by dialing 877-407-8037 (domestic) or
201-689-8037 (international). A live webcast of this conference
call will be available on our web site at
http://ir.igate.com/investors/. The teleconference replay will be
available until January 26, 2011 and can be accessed by dialing
877-660-6853 (domestic) and 201-612-7415 (international), passcode
364599 and account number 293. A replay will also be available
shortly after the live call via webcast on the iGATE Investor
Relations website at http://ir.igate.com/investors/.
About iGATE:
iGATE (Nasdaq:IGTE) is the first Business Outcomes driven
integrated Technology and Operations (iTOPS) solutions provider
with a global delivery model. iGATE's unique business model aligns
with the client's strategic objectives to achieve operational
efficiencies, increase cost variability and rationalize their
current operating environment. With industry expertise spanning
decades, iGATE has developed the right solutions with its Business
Outcomes driven approach for industry verticals - Banking,
Insurance, Manufacturing, Retail, Health Care, Media &
Entertainment and Telecom & Hi-Tech.
The iGATE Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=5150
Use of non-GAAP Financial Measures:
Effective from the fourth quarter of fiscal 2010, iGATE has
decided to use non-GAAP net income data and non-GAAP diluted
earnings per share. These non-GAAP measures are not in accordance
with, or an alternative for measures prepared in accordance with,
generally accepted accounting principles in the United States and
may be different from non-GAAP measures used by other companies. In
addition, these non-GAAP measures are not based on any
comprehensive set of accounting rules or
principles. Reconciliations of these non-GAAP measures to
their comparable GAAP measures are included in the attached
financial tables.
iGATE believes that non-GAAP measures have limitations in that
they do not reflect all of the amounts associated with iGATE's
results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate iGATE's results
of operations in conjunction with the corresponding GAAP
measures. These non-GAAP measures should be considered
supplemental in nature and should not be considered in isolation or
be construed as being more important than comparable GAAP
measures.
iGATE believes that providing non-GAAP net income and non-GAAP
diluted earnings per share in addition to the related GAAP measures
provides investors with greater transparency to the information
used by iGATE's management in its financial and operational
decision-making.
From time to time in the future, there may be other items that
iGATE may exclude for reviewing its financial results.
More specifically, the non-GAAP financial measures contained
herein exclude the following items:
- Acquisition expenses: iGATE incurs costs related to its
acquisitions, which are inconsistent in amount and frequency and
are significantly impacted by the timing and nature of iGATE's
acquisitions. iGATE believes that eliminating the non-capitalized
expenses for purposes of calculating these non-GAAP measures
facilitates a more meaningful evaluation of iGATE's current
operating performance and comparisons to the past operating
performance.
- Amortization of intangible assets: Intangible assets consist
primarily of customer contracts purchased in connection with the
delisting of iGATE's Indian subsidiary. iGATE incurs charges
relating to the amortization of these intangibles. These charges
are included in iGATE's GAAP presentation of earnings from
operations, operating margin, net income and diluted earnings per
share. Hence, iGATE excludes these charges for purposes of
calculating these non-GAAP measures.
- Stock-based compensation: Although stock-based compensation is
an important aspect of the compensation of iGATE's employees and
executives, determining the fair value of the stock-based
instruments involves a high degree of judgment and estimation and
the expense recorded may bear little resemblance to the actual
value realized upon the future exercise or termination of the
related stock-based awards. Furthermore, unlike cash compensation,
the value of stock-based compensation is determined using a complex
formula that incorporates factors, such as market volatility, that
are beyond our control. Management believes it is useful to exclude
stock-based compensation in order to better understand the
long-term performance of our core business.
Forward-Looking Statements:
Statements contained in this press release regarding the
benefits of the acquisition, the business outlook, the demand for
the products and services, and all other statements in this release
other than recitation of historical facts are forward-looking
statements. Words such as "expect", "potential", "believes",
"anticipates", "plans", "intends" and similar expressions are
intended to identify such forward-looking statements.
Forward-looking statements in the press release include, without
limitation, forecasts of market growth, future revenues, benefits
of the proposed acquisition, expectations that the acquisition will
be accretive to the results, future expectations concerning growth
of business, cost competitiveness and expansion of global reach
following the acquisition, and other matters that involve known and
unknown risks, uncertainties and other factors that may cause
results, levels of activity, performance or achievements to differ
materially from results expressed or implied by this press release.
Such risk factors include, among others: difficulties encountered
in integrating business; uncertainties as to the timing of the
acquisition, including the consummation of the public offer under
the Indian Takeover Regulations and the tender offer under US
securities laws; the satisfaction of the closing conditions to
the transaction, including the receipt of regulatory approvals;
whether certain market segments grow as anticipated; the
competitive environment in the information technology services
industry and competitive responses to the proposed acquisition; and
whether the companies can successfully provide services/products
and the degree to which these gain market
acceptance. Furthermore, in connection with the proposed
acquisition, the Company intends to borrow significant amounts,
including by issuing high yield notes, and will have to use a
significant portion of its cash flows to service such indebtedness,
as a result of which the Company might not have sufficient funds to
operate its businesses in the manner it intends or has operated in
the past. Additional risks relating to the Company are set forth in
the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2009, as well as the Company's other reports filed
with the Securities and Exchange Commission. Actual results
may differ materially from those contained in the forward-looking
statements in this press release. Any forward-looking
statements are based on information currently available to the
Company and it assumes no obligation to update these statements as
circumstances change. This document does not constitute an
offer to purchase or to sell securities in any jurisdiction.
Additional U.S-Related Information
The information contained herein is neither an offer to purchase
nor a solicitation of an offer to sell shares of Patni Computer
Systems Limited or iGATE Corporation or any of their respective
subsidiaries or affiliates. Subject to future developments, iGATE
Corporation intends to file tender offer documents with the SEC in
connection with the proposed acquisition. Shareholders
of Patni Computer Systems Limited should read those filings, and
any other filings made by iGATE Corporation with the SEC in
connection with the proposed Acquisition, as they will contain
important information. Those documents, when filed, as
well as iGATE Corporation's other public filings with the SEC, may
be obtained without charge at the SEC's website at www.sec.gov and
at iGATE Corporation's website at www.igate.com.
| |
| iGATE
CORPORATION |
| CONDENSED CONSOLIDATED
BALANCE SHEETS |
| (Amounts in thousands, except
per share data) |
| |
|
|
| |
December 31, |
December 31, |
| |
2010 |
2009 |
| |
(unaudited) |
(audited) |
| ASSETS |
|
|
| Current assets: |
|
|
| Cash and cash equivalents |
$ 67,924 |
$ 29,565 |
| Short-term investments |
71,915 |
67,192 |
| Accounts receivable, net |
37,946 |
24,533 |
| Unbilled revenues |
13,893 |
9,636 |
| Prepaid expenses and other current
assets |
5,380 |
4,628 |
| Foreign exchange derivative contract |
794 |
-- |
| Prepaid income taxes |
-- |
4,247 |
| Deferred tax assets |
5,422 |
31 |
| Receivable from Mastech Holding Inc. |
140 |
87 |
| Total current assets |
203,414 |
139,919 |
| |
|
|
| Deposits and other assets |
5,443 |
4,482 |
| Property and equipment, net |
52,950 |
42,682 |
| Deferred tax assets |
10,117 |
8,474 |
| Goodwill |
31,741 |
30,517 |
| Intangible assets, net |
1,378 |
2,086 |
| |
|
|
| Total assets |
$ 305,043 |
$ 228,160 |
| |
|
|
| LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
| Current liabilities: |
|
|
| Accounts payable |
$ 3,291 |
$ 1,515 |
| Accrued payroll and related costs |
19,709 |
14,173 |
| Accrued income taxes |
715 |
-- |
| Other current liabilities |
31,354 |
18,003 |
| Foreign exchange derivative
contracts |
-- |
1,097 |
| Restructuring reserve |
-- |
101 |
| Deferred revenue |
667 |
918 |
| Total current liabilities |
55,736 |
35,807 |
| |
|
|
| Other long-term liabilities |
1,251 |
1,035 |
| Total liabilities |
56,987 |
36,842 |
| |
|
|
| Shareholders' equity: |
|
|
| Common Stock, par value $0.01 per
share |
572 |
561 |
| Additional paid-in capital |
188,389 |
180,278 |
| Retained earnings |
75,474 |
38,228 |
| Common stock in treasury, at cost |
(14,714) |
(14,714) |
| Accumulated other comprehensive loss |
(1,665) |
(13,035) |
| Total shareholders' equity |
248,056 |
191,318 |
| Total liabilities and shareholders'
equity |
$ 305,043 |
$ 228,160 |
| |
| |
| iGATE
CORPORATION |
| CONDENSED CONSOLIDATED
STATEMENTS OF INCOME |
| (Amounts in thousands, except
per share data) |
| |
| |
Three Months
ended, |
Year
ended, |
| |
December
31, |
December
31, |
| |
2010 |
2009 |
2010 |
2009 |
| |
(unaudited) |
(unaudited) |
(unaudited) |
(audited) |
| |
|
|
|
|
| Revenues |
$ 81,013 |
$ 52,404 |
$ 280,597 |
$ 193,099 |
| |
|
|
|
|
| Cost of revenues (exclusive of Depreciation
and amortization) |
46,460 |
31,134 |
167,906 |
117,693 |
| |
|
|
|
|
| Gross margin |
34,553 |
21,270 |
112,691 |
75,406 |
| |
|
|
|
|
| Selling, general and administrative |
16,765 |
8,798 |
50,669 |
35,433 |
| |
|
|
|
|
| Depreciation and amortization |
2,415 |
1,975 |
9,014 |
7,582 |
| |
|
|
|
|
| Income from operations |
15,373 |
10,497 |
53,008 |
32,391 |
| |
|
|
|
|
| Other income (expense), net |
1,917 |
(1,529) |
4,686 |
(3,231) |
| |
|
|
|
|
| Income before income taxes |
17,290 |
8,968 |
57,694 |
29,160 |
| |
|
|
|
|
| Income tax expense |
2,568 |
334 |
5,939 |
585 |
| Net income |
$ 14,722 |
$ 8,634 |
$ 51,755 |
$ 28,575 |
| |
|
|
|
|
| Distributed earnings per
share: |
|
|
|
|
| Common stock |
$ 0.15 |
$ -- |
$ 0.26 |
$ 0.11 |
| Unvested restricted stock |
$ 0.15 |
$ -- |
$ 0.26 |
$ 0.11 |
| |
|
|
|
|
| Basic earnings per share from
operations |
|
|
|
|
| Common Stock |
$ 0.26 |
$ 0.16 |
$ 0.92 |
$ 0.52 |
| Unvested restricted stock |
$ 0.26 |
$ 0.16 |
$ 0.92 |
$ 0.52 |
| |
|
|
|
|
| Diluted earnings per share from
operations |
$ 0.25 |
$ 0.15 |
$ 0.90 |
$ 0.51 |
| |
|
|
|
|
| Weighted average shares outstanding,
Basic |
56,439 |
55,613 |
56,055 |
55,114 |
| |
|
|
|
|
| Weighted average dilutive common
equivalent shares outstanding |
57,857 |
56,590 |
57,394 |
55,951 |
| |
| |
| iGATE
CORPORATION |
| Reconciliation of
Selected GAAP measures to Non-GAAP measures |
| (Amounts in thousands, except
per share data) |
| (unaudited) |
| |
| |
Three Months
ended, |
Year
ended, |
| |
December
31, |
December
31, |
| |
2010 |
2009 |
2010 |
2009 |
| |
|
|
|
|
| GAAP Net income |
$ 14,722 |
$ 8,634 |
$ 51,755 |
$ 28,575 |
| |
|
|
|
|
| Adjustments |
|
|
|
|
| |
|
|
|
|
| Amortization of Intangible assets |
197 |
190 |
774 |
937 |
| Stock Based Compensation, net of income
taxes |
1,720 |
1,175 |
6,437 |
4,876 |
| Acquisition expenses, net of income
taxes |
3,213 |
-- |
3,213 |
-- |
| |
|
|
|
|
| Non-GAAP Net income |
$ 19,852 |
$ 9,999 |
$ 62,179 |
$ 34,388 |
| |
|
|
|
|
| Basic earnings per share from
operations |
|
|
|
|
| GAAP |
$ 0.26 |
$ 0.16 |
$ 0.92 |
$ 0.52 |
| Non-GAAP |
$ 0.35 |
$ 0.18 |
$ 1.11 |
$ 0.62 |
| Diluted earnings per share from
operations |
|
|
|
|
| GAAP |
$ 0.25 |
$ 0.15 |
$ 0.90 |
$ 0.51 |
| Non-GAAP |
$ 0.34 |
$ 0.18 |
$ 1.08 |
$ 0.61 |
| |
|
|
|
|
| Weighted average shares outstanding,
Basic |
56,439 |
55,613 |
56,055 |
55,114 |
| Weighted average dilutive common
equivalent shares outstanding |
57,857 |
56,590 |
57,394 |
55,951 |
CONTACT: Media Contact:
Prabhanjan Deshpande "PD"
+91 80 4104 5006
pr@igate.com
Prabhu S
+91 94440 40748
sprabhu@propr.in
Investor Contact:
Araceli Roiz
+1 510 896 3007
+91 97409 43004
araceli.roiz@igate.com
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